Facebook ad costs jump 21% as lead campaigns struggle while traffic ads thrive

Facebook advertisers faced significant cost increases in 2025, with lead generation campaigns experiencing a 21% jump in cost per lead to $27.66, according to comprehensive benchmark data released September 8, 2025. The analysis from WordStream LocaliQ examined over 1,000 campaigns across multiple industries, revealing divergent performance trends between traffic and lead-focused advertising objectives.

The data encompasses campaigns running between April 2024 and June 2025, providing insights into how Facebook's advertising platform performed during a period of economic uncertainty and increased competition. Despite rising costs, Facebook maintains substantial cost advantages over Google Ads, where the average cost per lead reaches $70.11.

Traffic campaigns demonstrate improved efficiency

Traffic-focused Facebook campaigns showed remarkable improvement across key performance indicators. Click-through rates increased to 1.71% from 1.57% in 2024, representing an 8.9% year-over-year improvement. Cost per click decreased 6.7% to $0.70, significantly lower than Google's average of $5.26.

Shopping, Collectibles & Gifts emerged as the top-performing industry for traffic campaigns, achieving a 4.13% click-through rate and the lowest cost per click at $0.34. Arts & Entertainment (2.10%) and Sports & Recreation (2.60%) also demonstrated strong engagement rates.

Automotive repair services struggled with the lowest click-through rate at 0.80%, while Finance & Insurance faced the highest cost per click at $1.22. These industries typically require more targeted approaches due to their specialized nature and limited market timing.

Lead generation campaigns face mounting challenges

Lead generation campaigns experienced declining performance across multiple metrics. Conversion rates dropped from 8.67% to 7.72%, marking an 11% decrease. The average cost per lead climbed 21% to $27.66, though this remains substantially below Google's $70.11 benchmark.

Click-through rates for lead campaigns remained relatively stable at 2.59%, showing minimal change from 2024's 2.58%. Cost per click increased modestly from $1.88 to $1.92, representing a 2.1% rise.

Restaurants & Food demonstrated exceptional performance with an 18.25% conversion rate and the lowest cost per lead at $3.16. Arts & Entertainment (3.92%) and Real Estate (3.75%) achieved the highest click-through rates for lead campaigns.

Dentists & Dental Services faced the steepest challenges, recording the highest cost per lead at $76.71 and the lowest click-through rate at 1.05%. This sector also experienced the highest cost per click at $9.78, reflecting the competitive nature of dental marketing.

Industry-specific performance variations

The benchmark data revealed significant variations across business categories. For traffic campaigns, Shopping, Collectibles & Gifts led performance metrics with a 146% year-over-year increase in click-through rates. Sports & Recreation saw a 102% improvement, while Attorneys & Legal Services gained 80%.

Conversely, Real Estate experienced a 36% decline in click-through rates for traffic campaigns, followed by Automotive repair services (-27%) and Restaurants & Food (-25%).

Lead campaign performance showed similar disparities. Restaurants & Food achieved remarkable improvements with a 341% increase in conversion rates and a 61% decrease in cost per click. Arts & Entertainment saw significant cost increases, with cost per lead rising 242% and cost per click doubling.

Career & Employment demonstrated cost efficiency improvements, reducing cost per click by 37% while maintaining competitive conversion rates.

Economic factors driving cost increases

According to Tyler Mask, Director of Optimization Strategy at LocaliQ, the performance changes reflect broader economic pressures. "Although CPC, CVR, and CPL have all taken a hit this year, CTR improving in spite of higher costs means consumers are still engaging with ads — a good sign for businesses."

Inflation and tighter household budgets appear to impact specific industries more severely. Home improvement and personal care sectors experienced particularly sharp conversion rate declines, likely reflecting reduced consumer spending in discretionary categories.

Increased competition for advertising space contributes to rising costs across the platform. Meta's continued platform enhancements and AI-powered targeting capabilities attract more advertisers, intensifying auction dynamics.

Privacy regulation changes also influence advertising effectiveness. Apple's App Tracking Transparency and evolving data collection policies require advertisers to adapt targeting strategies, potentially impacting conversion efficiency.

Facebook maintains competitive advantage over Google

Despite cost increases, Facebook advertising provides substantial value compared to Google Ads. Google advertising costs rose 12.88% across industries in 2025, with 87% of sectors experiencing higher click costs. Legal services recorded the highest Google cost per lead at $144.03, demonstrating Facebook's continued cost effectiveness.

The platform's visual nature and social context provide unique advantages for certain business types. Consumer-facing brands benefit from Facebook's engaging ad formats, while service-based businesses often find better performance through targeted lead generation campaigns.

Meta's Advantage+ AI-powered tools offer automation benefits, though experts recommend careful implementation to maintain lead quality. Brett McHale from Empiric Marketing suggests limiting automated features to prevent bot submissions and maintain conversion quality.

Strategic implications for advertisers

The benchmark data indicates advertisers should reassess campaign objectives based on business goals. Traffic campaigns offer improved efficiency for awareness and website visits, while lead campaigns require more sophisticated targeting to maintain profitability.

Industry experts recommend focusing on lead quality over quantity as conversion rates decline. Tighter targeting parameters and enhanced creative testing become essential for maintaining return on investment.

The performance divergence between traffic and lead campaigns suggests a balanced approach utilizing multiple objectives. Combining brand awareness traffic campaigns with targeted lead generation efforts can optimize overall marketing funnel performance.

Advanced tracking implementation becomes crucial as advertising costs rise. Businesses must establish comprehensive measurement systems to evaluate true campaign effectiveness beyond basic metrics.

Future outlook for Facebook advertising

Experts anticipate continued cost pressure throughout 2025 as competition intensifies. Businesses maintaining advertising investments during economic uncertainty may gain market share as competitors reduce spending.

Meta's continued AI development promises improved targeting capabilities, though implementation requires careful monitoring to prevent automated systems from compromising lead quality.

The platform's expansion into new ad formats and placement options provides growth opportunities for advertisers willing to test emerging features. Early adoption of new advertising tools often provides cost advantages before widespread implementation.

Privacy-first advertising strategies will become increasingly important as data collection restrictions evolve. First-party data collection and customer relationship management integration offer paths to maintain targeting effectiveness amid regulatory changes.

Timeline

• September 8, 2025: WordStream LocaliQ releases Facebook Ads Benchmarks 2025 showing 21% cost per lead increase
• July 2025: Facebook lead generation costs continue rising amid economic pressures
• May 2025: Google Ads costs rise 12.88% across all industries, highlighting Facebook's relative value
• April 2025: Google Q1 earnings show advertising strength amid AI transformation
• March 2025: Google sunsets Enhanced CPC bidding for search and display campaigns
• January 2025: Google Ads metrics show rising costs across industries in 2024 data
• October 2024: WordStream releases Facebook Ads Benchmarks 2024 showing improved performance
• September 2024: Google announces Enhanced CPC deprecation beginning October 2024

Summary

Who: WordStream LocaliQ analyzed Facebook advertising performance data affecting businesses across 22 industries using traffic campaigns and 15 industries running lead generation campaigns.

What: Facebook advertising benchmarks for 2025 revealed a 21% increase in cost per lead to $27.66, while traffic campaigns showed improved efficiency with 1.71% click-through rates and $0.70 cost per click.

When: The analysis covers campaign data from April 2024 through June 2025, with results published September 8, 2025.

Where: The study encompasses US-based Facebook advertising campaigns across multiple business categories, from restaurants to legal services.

Why: Rising advertising competition, inflation, privacy regulation changes, and economic pressures drive cost increases while social media consumption patterns shift toward platforms like Facebook for business discovery.